Report: Microsoft, AOL and Yahoo to cooperate on ads

Microsoft, Yahoo and AOL plan to work together to allow their respective sales forces to sell leftover online advertising inventory on each other’s sites, teaming up in an attempt to compete more effectively with Google, reports AllThingsD.com’s Peter Kafka this morning.

Microsoft and Yahoo already partner on search technology and search advertising, but this would expand their relationship and also bring AOL into the fold to a limited extent.

The unusual arrangement between the competitors is intended to help the companies reap higher returns from those unused advertising slots than if they were to turn the space over to advertising networks. According to the report, the plan was outlined by the companies at a dinner in New York last night. This hasn’t been formally announced. We’ve asked Microsoft for comment.

Business Insider asks why Microsoft doesn’t just go ahead and buy AOL and Yahoo. Of course, Microsoft already tried that in the case of Yahoo, unsuccessfully.

Update: Here’s Microsoft’s statement. “We believe that choice, openness and competition help drive innovation in the market. As such, we are always looking for ways to partner with others in the digital advertising ecosystem to offer innovative solutions that benefit advertisers and publishers. However we have nothing specific to share at this time.”